Cramer: Hated stock to generate lovely returns?

When Wall Street pros hate a stock, it can take a while for them to recognize that the company has made big changes.

In turn, a stock can be too cheap.

Jim Cramer thinks that may be exactly what's happening with SandRidge, an independent oil and gas company, right now.

Now that's not to say the Wall Street's hate wasn't justified; it was.

Cramer says, "The former CEO practically ran the company into the ground. Because of mismanagement and other factors shares tumbled from $67 in 2008 to the single digits. And the stock never really bounced back."

If that's not a reason to hate a stock, what is?

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However, Cramer also says SandRidge is experiencing an incredible turnaround, yet "because SandRidge is so hated by Wall Street, the analysts can't see the incredible turnaround happening in front of their faces."

And the "Mad Money" host believes the turnaround is pretty incredible.

"Since new CEO James Bennett took over, SandRidge has delivered three consecutive quarters where the company beat the estimates and raised guidance," Cramer explained.

Cramer is also bullish due the the company's real estate assets, particularly the so-called Mississippian play, where they have 1.8 million acres. "Currently, SandRidge has 10 years worth of drilling inventory and that's just from conventional drilling. New technology could extend that to 20 years or more," Cramer said.

Also SandRidge has grown more efficient.

"SandRidge has been able to pare down its focus to 360,000 core acres, which has allowed the company to drill far fewer bad wells and far more great ones."

The success of the strategy has led to some very bullish forecasts.

"They're predicting over 20% annual production growth over the next three years, and 30% plus growth in earnings before interest, taxes, depreciation and amortization, even as the company's capital expenditure should remain flat over that same period," Cramer said.

On top of that, "SandRidge has cut costs aggressively, it's sold off non-core assets including its Gulf of Mexico holdings for $1.1 billion earlier this year, and it's focused its capital spending on a smaller area."

"Considering the potential, at $6 I think the stock is just too cheap," Cramer said. "On a net asset value basis, SandRidge could be worth anywhere from $10 to $15 a share."

"Now, because of the sentiment, this is a risky stock, so it's only worth buying for speculation. But if SandRidge's new management keeps on delivering, I suspect the Street will soon feel a lot differently about this stock."